Diamonds are crystalline minerals composed of pure carbon. They are the hardest substance known.
The Driller needs diamonds to keep his drill bits sharp, which in turn he uses to search for more diamonds. Once while searching for diamonds, the Driller ended up boring holes all over Cats Lair before he was stopped by the ThunderCats.
It seems that there are many deposits of diamonds underneath the ground where the Cats Lair has been built.